IMO better options- If you don't need the money in the next 10+ years look into Annuities I'm seeing 7-9% and you don't have to participate in market downturns.

Spending more time in real estate then any other activity Test 2: Material participation test: (which is out of scope for this question) As far as part 1 on test 1 goes, you are right it would count.

You'll never meet the material participation requirements.

To leverage this benefit, prospective property owners must engage in short-term rentals and provide substantial services to guests, such as daily cleaning, meal provisions, or transportation services.Additionally, navigating a material participation test becomes crucial.

Build Local and National Networks: Participate in real estate investing clubs, meetings, and networking events in your community.

Hi @John Morganto qualify as real estate professional here are the tests:Perform more than 50% of services in real property trades or businesses (“50% test”)Perform more than 750 hours of service in real property trades or businesses (“750 hours test”)Materially participate in each rental activity (“material participation test”)what I believe @Jonathan Bock is alluding to is the IRS is pretty strict on these tests and your wife will be expected to substantiate her material participation.

One option is to participate in fractionalized lending (or fictionalized as @Jay Hinrichs suggests 🤣).

@James MeyerAs a realtor you would be classified as self-employed and therefore eligible to sponsor a Solo 401(k) - assuming you do not own or control any other business that has employees.Your employee deferrals are capped at $23,000, or $30,500 if you are over age 50, across all plans you participate in. 

SBA finance would be 10% down, SBA 45%, participating bank 45%. 

The only real exception is investment in a business in which Plan Participant or other disqualified person already has less than 50% ownership.Hope that helps.